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    Employer fee is necessary to support health care


    Without using the dreaded T word, Governor Charlie Baker has proposed a stiff hike in the fees that some businesses must pay to state government. Semantics aside, the proposed $2,000-per-employee assessment is essentially a tax, and it’s sent ripples of consternation through the business community that once thought they had an ally in the Republican governor.

    Baker’s office is now discussing modifications to the plan. But with the state’s health care bills rising at unsustainable rates, Baker’s fee — or something strongly resembling it — will be necessary to steady the state’s budget.

    The state’s health care bills have been skyrocketing as more Massachusetts residents enroll in MassHealth, the state’s Medicaid program for low-income residents. The Baker administration attributes some of that shift to workers choosing not to enroll in workplace plans, which may have high deductibles or lower quality, coupled with the expanded eligibility for Medicaid under the federal Affordable Care Act (aka Obamacare). The bottom line is that Massachusetts taxpayers are taking a financial burden off many employers of low-wage workers by providing subsidized insurance to those employees. The administration estimates that the number of full-time employees who do not receive employer-sponsored insurance has gone up by 118,000 workers since 2011. Last year, 379,000 employed Massachusetts residents were also on MassHealth.


    The $2,000 fee is intended to address the fiscal consequences of that shift. The proposal would apply only to businesses that have 11 or more full-time employees and provide insurance to fewer than 80 percent of their workers. The assessment would be on a sliding scale, and shrink as businesses approach the 80 percent figure. Baker’s proposed assessment resembles, in some respects, the original “fair share” provision of the Massachusetts health care reform that was repealed in 2013 to harmonize the state’s law with the Affordable Care Act.

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    Overall, the outline of Baker’s proposal is sound, and reflects the guiding principle that insurance is a shared employer responsibility. The details, though, need some work to focus more narrowly on the right group of employers.

    A reasonable criticism voiced by the Associated Industries of Massachusetts, among others, is that Baker’s proposal doesn’t take into account the many reasons an employee may not sign up for coverage through their employer. For instance, some workers may be offered perfectly good insurance but still choose to get health coverage through a spouse’s employer. Why should an employer be punished for the employee’s choice in that scenario? What about employees under age 26 who are offered insurance but choose to stay on a parent’s plan, or veterans who get care through the VA? The Baker administration has a good reason to be strict: Officials rightly fear creating a perverse incentive for employers to provide inferior insurance in order to push employees onto their spouse’s or parent’s insurance plan instead. But there should be a middle ground, and as the Baker administration mulls changes, it should seek a way to accommodate employers who can demonstrate that they made a bona fide effort to offer quality insurance but fell short of the 80 percent uptake rate for reasons outside their control.

    Additionally, Baker’s initial plan didn’t take into account how much employees make, which could lead to some bizarre outcomes: a hedge fund or law firm might be subject to the tax, even though it is unlikely that any of its highly paid employees are even eligible for MassHealth. The proposal should be specifically tailored to employers who pay low wages.

    The $2,000 figure in Baker’s plan — a huge increase over the old $295 fair-share fee — also needs scrutiny. The Baker administration points out that the average cost of insuring a MassHealth enrollee is $6,737, but it would be helpful to know exactly how much of the marginal increase in overall spending can be attributed to workers leaving employee plans.


    The debate in Massachusetts plays out against uncertainty over the future of the Affordable Care Act, which Republicans in Congress and President Trump nominally remain committed to repealing. Critics of Baker’s plan argue that any state action should wait for resolution on the federal level. But that could take years, given the new presidential administration’s general ineptitude.

    For now, the state has to operate within the reality of the Commonwealth’s employer-based health insurance system and the Affordable Care Act. When a minority of employers choose not to offer adequate health insurance to low-wage workers, it doesn’t make the cost of covering their employees go away — it just sticks someone else with the bill. That someone else is MassHealth, and Baker and his administration deserve credit for confronting the resulting fiscal problems head first.